20 February 2013

Zimbabwe: Nyambuya Hits Back

NATIONAL Indigenisation and Economic Empowerment board chairman Mr Mike Nyambuya has scoffed at claims that there was no transparency in the manner the Zimplats indigenisation deal was done saying the allegations were baseless.

In an interview yesterday, Mr Nyambuya said the "onslaught" on the indigenisation programme by some sections of the media were merely unnecessary pronouncements by certain opponents of the broad based empowerment initiative.

Under the indigenisation law, foreign owned companies are required to turnover at least 51 percent of their shareholdings to black indigenous Zimbabweans.

Last week, a local daily published a story headlined "Indigenisation under threat" which potrayed that the empowerment drive had "turned out to be a massive cash cow for well-heeled and politically-connected elites," claiming its "three months" investigation had unearthed "misrepresentation(s) and grand looting."

The paper said any arising disputes would be resolved by the British courts while advisors to the transaction, Brainworks Capital had not been properly appointed.

There were also comments in the media which created impression that the deal would create debt for the country and was concluded outside the country's laws.

Contrary to the allegations, Mr Nyambuya said the term sheet was a non binding agreement and definitive adding "neither party therefore is bound by these terms of agreement."

"NIEEB and Zimplats will begin to engage through their technical legal teams on the substantive and binding provisions of the indigenisation agreements. In the meantime, the term sheet must be taken as a guiding document confirming the agreement by Zimplats to comply with the indigenisation laws," he said.

Mr Nyambuya said Zimplats, by virtue of its status as a foreign owned company had a legal obligation to sell 51 percent to indigenous Zimbabweans. Impala Platinum, the world's second largest platinum miners owns 87 percent in Zimplats.

"So to say the transaction was done outside the laws is mischievous," he added.

Commenting on allegations that the Zimplats transaction would be subjects of English courts, Mr Nyambuya said clause 28 of the pact states that the term sheet will be governed and interpreted in accordance with the laws of Zimbabwe. Mr Nyambuya said issues relating to vendor financing, a mechanism that would be used to finance the transaction, cession and pledge will be interpreted according to "English commercial law" not resolved in "English Courts."

This is because the bulk of Zimbabwe's commercial law is interpreted using English law. Sections 89 of the current law states that the law to be applied in Zimbabwe shall be the law applicable at the Cape of Good Hope in 1891. At that time the law applicable at the Cape colony was a hybrid of Roman Dutch law and English law. English law mostly governed mercantile law, which is still the case to date.

He said Clause 27 states that any dispute arising out of the term sheet will be arbitrated under UNCITRAL in London. UNCITRAL is the United Nations Commission on Trade Law, considered a reputable and neutral dispute resolution forum between private citizens and member states of the United Nations. Zimbabwe is a member state of the UN and subject UNCITRAL by consent.

On the appointment of Brainworks, Mr Nyambuya said the advisors' mandate was formalised through a letter signed by NIEEB on June 8, last year.

The appointment was "purely" based on merit and experience that Brainworks had shown.

Prior to the appointment of Brainworks, NIEEB had sought services of CBZ Bank, MMC Capital, Vunani Capital, Renaissance Financial Holdings, Capvest Capital and Genesis Global Finance. Mr Nyambuya defended the vendor financing instrument saying it was a more viable option. Even in South Africa, most BBEs were financed through vendor financing.

In 2004, Implats offered 15 percent stake of Zimplats to indigenous Zimbabweans for US$31 million then, but none of the interested consortium successfully raised the money. "If we had not taken this route, the transaction would not have sailed through," he said. "However, any Government agent is free to come up with an alternative."

The indigenisation programme, now in full swing has seen creation of various community share ownership schemes with companies donating seed capital for developmental projects.

lDo not miss the full interview with Mr Nyambuya in tomorrow's issue

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